A recent survey of 116 economists revealed that 74 of them predict the Federal Reserve will make its first interest rate cut of 25 basis points in September. This prediction is a significant shift from the previous survey, where only five economists forecast a rate cut in July, a decrease from 11 in a May survey. No one predicted a rate cut in June.

The survey highlights the uncertainty surrounding the Federal Reserve's monetary policy, with economists divided on the timing of the first rate cut. Oscar Munoz, Chief US Macro Strategist at TD Securities, stated that the Federal Reserve is in a favorable position considering the current monetary policy's constraints on the economy. However, the possibility of an early rate cut is slim due to persistent high inflation, particularly the PCE price index, and extremely low unemployment rates.

The survey also revealed that 68 economists predict two rate cuts this year, roughly consistent with last month's survey. This suggests that the Federal Reserve is likely to take a cautious approach to monetary policy, given the current economic conditions. The median forecast shows that inflation indicators such as CPI, core CPI, PCE, and core PCE are not expected to reach 2% until at least 2026. This indicates that the Federal Reserve will continue to prioritize price stability over economic growth.

The unemployment rate is expected to remain close to the current 3.9% until at least 2027, indicating that the labor market will continue to be tight. This suggests that the Federal Reserve will need to carefully balance the risks of inflation and unemployment when making monetary policy decisions.

In conclusion, the survey highlights the uncertainty surrounding the Federal Reserve's monetary policy, with economists divided on the timing of the first rate cut. The possibility of an early rate cut is slim due to persistent high inflation and extremely low unemployment rates. The survey also suggests that the Federal Reserve will continue to prioritize price stability over economic growth, with inflation indicators not expected to reach 2% until at least 2026.